December, 19 2007
JSW Steel to buy iron ore mine in Latin America - Report
Reuters reported that JSW Steel Limited is planning to buy a mine in Latin America in its first overseas iron ore venture.
The report cited Mr Sajjan Jindal vice CMD of JSW Steel as saying that the mine has more than 500 million tonnes of ore. However he declined to provide details as talks are in progress.
Mr Jindal had earlier in October 2007 said that it bought a coal mine in Mozambique and would study more purchases of coal and iron ore assets.
JSW, which is doubling capacity to 6.8 million tonnes, has 2 iron ore mines in India with combined reserves of about 110 million tonnes. It needs more raw materials to feed three, 10 million tonne mills it plans to build in India by 2020.
Jai Balaji unveils mega expansion plans
Jai Balaji Industries Limited announced that its board of directors at a meeting on December 17th 2007 approved the plan to execute a series of expansion projects at its manufacturing unit at Banskopa in West Bengal at a total cost of INR 1,055 crore.
The entire project will be completed in phases in between September 2008 and June 2009 and includes following facilities
1. Power plant of 40 MW
2. Coke oven plant of 0.400 million tonne
3. Pallet plant of 1.125 million tonne
4. Tubes & pipes plant of 0.240 million tonne
5. Ferro alloy plant of 0.025 million tonne
6. Rolling mill of 0.300 million tonne
Jai Balaji board has approved the Appointment of Mr SB Singh as an additional director with effect December 17th 2007.
Jai Balaji board also decided to call an EGM on January 10 to seek approval of the members of the company for preferential allotment of 61,18,000 zero coupon fully convertible debentures of the face value of INR 326.90 each for cash at par to Citi Venture Capita l Fund and 22,41,000 such debentures to India Equity Partners Fund I, LLC, apart from preferential allotment of 3,00,000 warrants at INR 326.90 each to Sai Prasad Multitrade Pvt Ltd and 93,00,000 warrants to promoter, promoter group companies, directors and relatives.
CPI M to oppose water supply for POSCO plant
Mr Prakash Karat chief of CPI M said that mineral policy has to protect the interest of the states and that certain issues relating to the POSCO project needs to be reviewed like the permission to export ore. He added that there are also some land related problems.
Mr Karat said that the party resolved to oppose any supply of water to the proposed POSCO plant through the Taladanda irrigation canal.
He added that the providing Mahanadi waters to the plant through Taladanda canal will spell doom to farmers of undivided Cuttack district and will also result in scarcity of drinking water.
WB starts land acquisition for TATA Metaliks' plant
ET reported that West Bengal government has finally kicked off the much delayed land acquisition process for TATA Metaliks’ proposed 0.5 million tonnes mini steel plant in Kharagpur.
Mr Nirupam Sen commerce & industry minister of West Bengal said that “We have started the process of directly buying land from landowners for the TATA Metaliks project. After we complete the purchase, we will transfer it to TATA Metaliks’.”
TATA Metaliks already has a unit operational in the area since 1994 in partnership with West Bengal Industrial Development Corporation, where it makes foundry grade pig iron. It has been awaiting land allotment from the state government to set up a mini steel plant. TATA Metaliks’ had requested the state government for some 350 acres to set up the unit and the government had, in fact, promised to allot the requisite land by June 2007.
TATA Power plans to enter into shipping business
TATA Power Company Limited said that it is planning to enter the shipping business and will seek shareholders' nod through a special resolution for starting the business of ship owning, carriers and charterer by land and sea and barge owning. It will also raise INR 4,000 crore by issuing securities in domestic or international markets.
TATA Power's plans to foray into the shipping business comes after its acquisition of 30% stake in 3 Indonesian coal firms earlier in 2007 for USD 1.1 billion. It plans to ship coal from Indonesia for its power plants, including the 4,000 MW Mundra project in Gujarat. This move is seen for procurement of coal for the its power units
TATA Company said that shareholders can give their consent through postal ballot by January 16th 2008. Its board of directors has appointed Mr Shirin Bharucha as the scrutinizer for conducting the postal ballot and it would announce the results of the postal ballot on or before January 18th 2008. It said that securities would be allotted when necessary and at a price to be decided in consultation with the book running lead managers on such terms and conditions as the board may in its absolute discretion decide.
Varsana Ispat to expand TLT capacity
BL reported that Kutch based integrated tower manufacturing company Varsana Ispat Limited is planning to invest INR 300 crore to expand its transmission tower manufacturing capacity from the existing 14,000 tonnes per annum to 120,000 tonnes per year. The expansion plan includes setting up of a captive power plant of 36 megawatt that will use imported coal and lignite to meet its power requirements.
Mr Akshay Jhunjhunwala CEO of Vasana Ispat told BL that “The expansion would be part funded through the raising of funds to the extent of INR 200 crore from the private equity and an IPO next year, and partly through internal accruals.”
Mr Jhunjhunwala added that “In view of the current order book with entire capacity being booked till March 2008, it also plans further augment the capacity to 156,000 tonnes per year.”
Varsana Ispat, which started commercial production at its Varsana plant near Kandla in Gandhidham in December 2005, had achieved its transmission tower unit capacity of 14,400 tonne per annum 3 months back and its turnover is projected to double to nearly INR 300 crore in 2007-08 from INR 150 crore in 2006-07. Varsana Ispat is currently supplying transmission towers to Karnataka Power Ltd, BSNL and Global Teleservices Ltd and is in talks with Bharti and Reliance groups as well.
L&T short lists 3 locations for new shipyard
PTI reported that Larsen & Toubro has short listed three locations for setting up a new shipyard at an estimated investment of up to INR 2,000 crore.
Mr MV Kotwal senior executive VP of heavy engineering of L&T told PTI that "We are in the stage of finalizing the location for our next shipyard. We have short listed three locations. Oone is near Kakinada in Andhra Pradesh and two others are near Chennai in Tamil Nadu and Mundra in Gujarat).”
He said that L&T expects to finalize the location in the next few months and would take another two and half years for the new shipyard to be operational.
Mr Kotwal said that L&T would invest between INR 1,500 crore to INR 2,000 crore.
He added that "The new shipyard will be focusing on three segments. One will be for defense ship production, another for niche commercial applications like CNG and LNG carriers while the third activity would be for ship repairing.”
Konkan Railway restructuring plan finalized
It is reported that Board for Reconstruction of Public Sector Enterprises has finalized a restructuring plan for Konkan Railway Corporation.
The restructuring plan includes
1) Conversion of INR 2,627 crore loans into preferential shares by the government
2) Agreeing the rail ministry's proposal of not diluting stake in the company by not inviting private partners
Union government has approved the revival proposal, keeping in mind the recommendations of the nodal ministry in this regard and will send it for the cabinet's approval by 2007 end. The railway ministry had asked for budgetary support for 3 years to cover the operational costs of Konkan Railway.
Intelligentsia to conduct a seminar on POSCO
SNS reported that the Intelligentsia has decided to conduct a seminar on “The benefit and impact of POSCO steel project and Special Economic Zone” in Jagatsinghpur in Orissa on December 24th 2007.
Mr Ranjit Mohanty the convener advocate of the Intelligentsia said that it is a non political and an independent one. He added that “As a result of this, we have invited intellectuals, social activists, government officials and POSCO officials to know the benefits of the project. The legislators of the district have agreed to attend the seminar.”
Kochi Port to install vessel traffic management system
BL reported that Cochin Port Trust has decided to install a modern vessel traffic management system as part of its ongoing strategy to modernize its infrastructure to support the upcoming facilities such as international container transshipment terminal, LNG terminal, SPM of BPCL KR, cruise terminal and has entered into an agreement with Transas Limited of Ireland for the purpose. The project, which is being implemented on a turn key basis, will be commissioned by November 2008.
Installation of vessel traffic management system facility will enable the port to ensure total navigational safety to monitor the vessel traffic movement in the entire harbor and detect the movements of any unauthorized or unscheduled vessels in the area.
VTMS will monitor the vessels in the harbor to prevent accidental collision, grounding and damages to underwater structures with special reference to the anchored vessels in the anchorage and those moving in the navigational channel. It will also play an important role in the security of the port based special economic zones at Vallarpadam and Puthuvypeen where vital installations such as the SPM facility and the storage tank farm of BPCL KR are situated and a number of maritime projects including ICTT and LNG terminal by Petronet LNG are in different stages of construction.
While improving the safety and averting the risks of vessel traffic accidents in port area, the VTMS will also help monitor the position of navigational aids such as buoys, etc. in the harbor area. The system will provide necessary data to other sub systems of the computerized port management information system, which in turn will enable improvements in the official procedures and services to the customers.
Rally staged against TATA Steel’s Kalinga Nagar steel plant
SNS reported that several organizations have joined hands and staged a rally at Duburi in Orissa protesting against the proposed steel plant of the TATA Steel in Kalinga Nagar.
The Sukinda Citizen Surakhya Mancha, the Downtrodden Dalit Adibashi Ekata Mancha and the Chasi Mulia Sangharsh Committee held a meeting, where the former minister Mr Sarat Rout condemned the forcible displacement of people for industrial purposes.
Mr Chakradhar Alda president of Sukinda Citizen Forum and tribal leader from Sukinda Mining Belt too criticized the displacement policy of the state government. A number of tribals with traditional weapons were present in the meeting.
Unitech to invest INR 20,000 crore for developing 48 malls
It is reported that Indian real estate major Unitech is planning an investment of around INR 20,000 to develop 48 malls and shopping centers across the country, in a phased manner by 2013.
As per report, Unitech will develop 24 malls covering more than 20 million square feet of malls and shopping centers in the first phase, out of which around 18 are at the designing stage, while the construction work has started on 6 malls. The proposed malls and shopping centers will come in the NCR, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Chandigarh, Dehradun, Lucknow, Bhopal, Goa, Vizag, Bhubaneshwar, Kochi and Trivandrum.
Each of the proposed eight malls in metro cities will be one million square feet in size. The mall in Chandigarh will also have an entertainment park, while a convention centre will be built in the one developed in Kolkata.
Unitech also plans to develop over 60 million square feet of retail space through these malls and shopping centers.
Unitech currently has two operational malls in Noida and Delhi. After the proposed expansion, the number will reach 50 by the end of 2013.
Apeejay Shipping orders COSCO for 3 vessels
Apeejay Surrendra Group’s Apeejay Shipping Limited plans to augment its fleet size through acquisition of new builds. It is reported that orders have been placed for three more bulk carriers of 57,000 DWT each with Cosco Shipyard of China.
The vessels, Dolphin 57 design geared bulk carriers, will be built at Cosco’s Guangzhou shipyard, with deliveries spread between 2009 and 2011. The first vessel is due to be delivered in April 2009. The total cost of the vessels is estimated at USD 130 million.
Captain SS Mahapatra CEO of Apeejay Shipping told Business Line that the company would continue to be in the market for acquiring the right types of ships. He said “Tonnage acquisition is an ongoing process. With the dry bulk markets expected to remain firm over the next three years or so, it is a good time to expand the fleet”.
He added that “With Cosco, we have close business relations for ship repairs and dry docking for more than 10 years and we might work with them to expand the Panamax type of vessels in near future.”
Its fleet size now comprises four vessels, all bulk carriers, totaling 233,000 DWT. At present, the number of Panamax type vessels in Apeejay Shipping’s fleet is two including 1990 built MV Suryavir of 71,000 DWT and 1977 built MV Sridevi of 65,000 DWT.
Steel Strips Wheel gets fresh export orders from Peugeot
Steel Strips Wheels Limited announced that it has secured an export order for supply of 15,000 steel wheel rims to PSA Peugeot Citreon.
Steel Strips Wheels, flagship arm of Steel Strips group, is engaged in the manufacturing of single piece steel wheel rims in the range of 10 to 30 inches diameter for scooters, passenger cars, utility vehicles and tractors.
Reliance and TATA Power may have to pay more bond for Tilaiya UMPP
ET recently reported that Reliance Power and TATA Power may have to pay more as bid bond for the Tilaiya project as the centre may impose revised standard bidding norms for UMPPs for this project.
Under the changed bidding norms, companies applying for second or third projects need to pay up to twice the existing bond. If the bid is won, companies would have to shell out extra money as performance bond. The new norms apply to companies that have already won a UMPP.
An official of the power ministry said that “The power ministry has sought the law ministry’s opinion on whether the changes in the bidding parameters as approved by an empowered group of ministers should be included for the Tilaiya project also or should it be left only for future projects. If the law ministry advises that new norms should be made applicable with immediate effect, the standard bid document for Tilaiya would have to be modified. This could delay award of the project and change the bids of 13 interested companies who have submitted requests for qualification documents.”
The changed norms would mainly impact Reliance Power that has already won 2 UMPPs at Sasan and Krishnapatnam and TATA Power that has won the Mundra project. Under the new norms, while Reliance Power would have to shell out INR 240 crore as bid bond and INR 600 crore as performance bond only if the project is won by the company, TATA Power may have to pay INR 180 crore as bid bond and INR 450 crore as performance bond.
At present, initial bids for UMPP are backed by a bid bond of about INR 120 crore, which is replaced by a performance guarantee of INR 300 crore by the winning bidder. Under the revised norms, eGoM has decided that the bid bond would increase to INR 180 crore for the second project and to INR 300 crore for third project. Similarly, performance bond would also increase from INR 300 crore to INR 450 crore and finally to INR 600 crore.
6 bid for consultancy for freight corridor project in Maharashtra
BL reported that around 6 bidders have submitted their expressions of interest with the Maharashtra government for appointment as consultants for the freight corridor project.
The bidders include
1) Louis Berger Group
2) KPMG International
3) Vossing of Germany
4) TUV SUD South Asia
5) Rohit Gupta & Associates
6) Bhobe & Associates
The consultants will be appointed to carry out a feasibility study and help Maharashtra government prepare the bidding document for the project.
The proposed high speed rail is for 6 routes in the Mumbai Metropolitan Region, including potential maglev lines. The distances for each route will be between 20 kilometer and 50 kilometer. Besides, a passenger cum freight railway corridor between Mumbai and Nagpur a distance of 1,000 kilometer is also part of the project.
DLW poised to achieve target for 2007-08
BS reported that diesel electric locomotives manufacturer Diesel Locomotive Works, which had set ambitious targets for the current fiscal, is likely to achieve them.
Mr Pradeep Kumar Mishra PRO of DLW said that “We are confident enough to achieve production target of 200 engines for the year 2007-08. It is working on cost effectiveness and technology upgrade, which are the key to retain global competitiveness by putting price value technology equation right.”
Mr Mishra said that “The production, which began with only 2% indigenous components, now nearly has all components indigenous. For the financial year 2006-07, it surpassed its set target of 182 rail engines by four marks and produced 186, which is the maximum output of the unit till date."
He added that out of the decided production, DLW has to manufacture 62 high horsepower AC/AC, microprocessor controlled locomotives with fault diagnostic system and capable of pulling 58 box n wagon freight train at 100 kilometer per hour even on 1 in 200 gradient.
DLW was set up in 1961 as a Greenfield project in technical collaboration with American Locomotive Company to manufacture diesel electric locomotives. With a capacity of building more than 150 locos per year, it is one of the world’s largest diesel locomotive manufacturers in the world. DLW client’s list includes Indian Railways, steel plants, port trusts or other national railways along with foreign countries like Sri Lanka, Malaysia, Vietnam, Bangladesh and Tanzania.
Andhra cabinet clears PPA with BPL Power Limited
BS reported that Andhra Pradesh cabinet has decided to revive the 13 year old power purchase agreement with BPL Power Projects AP Limited by reinstating the same with a levelized tariff of INR 1.79 per unit. The power purchase agreement was amended twice before being terminated in 2004.
An Andhra state energy department statement said that in exchange, BPL has agreed to reduce the capital cost by INR 175 crore to INR 2,475 crore, which results in reduction of levelised tariff to INR 1.79 per unit from INR 1.88 per unit as originally proposed.
A government source said that the revival of the power purchase agreement was accepted as the centre was keen on the project since it was backed by Japanese investors.
The project, backed by Japanese investors, would now be taken up at an enhanced capacity of 600 MW as compared with the originally envisaged 520 MW at the proposed location in Ramagundam in the state.
TATA bids over USD 2.05 billion for Jaguar Land Rover
ET reported that Jaguar and Land Rover are set to see a change of ownership in the new year with their current American parent Ford Motor looking to finalize a winner by the end of 2007 or early 2008.
Sources said that the bids from leading Indian conglomerates and the front runners for the deal, TATAs and Mahindras, are worth over USD 2.05 billion and USD 1.9 billion respectively.
While no official confirmation could be obtained, a private equity firm called OneEquity led by former Ford CEO Mr Jacques Nasser is still in the reckoning, but Ford is understood to be preferring a buyer directly involved in the auto manufacturing business. According to the sources, Ford is looking to finalize the name of the buyer by the end of 2007 or early 2008.
Meanwhile, The New York Times reported that Jaguar and Land Rover are poised to join TATA Motors and a decision could be made in the next few days.
Keel laid for vessel at HSL
BL reported that the keel for the fourth 30,000 DWT bulk vessel for Good Earth Maritime Ltd of Chennai was laid at Hindustan Shipyard Limited on Tuesday. The vessel will be ready in a year’s time.
Commodore Naresh Kumar director technical, Cdr RB Rao GM shipbuilding, Mr A Narasinga Rao GM planning and other senior officials of HSL participated in the function. Representatives of GML were also present.
Commodore Naresh Kumar said that he is confident that the shipyard would deliver all the ten vessels to GML by 2011 as per schedule.
HSL is delivering the second of the series of bulkers to GML in the first week of January and the third vessel in February. The keel for the first vessel in the 53,000 DWT series will be laid by the end of December, the release added.
CSN unveils USD 5 billion investment in Minas Gerais
Brazilian integrated steelmaker CSN has unveiled plans to pump BRR 9.50 billion (USD 5.25 billion) into projects located in southeast Brazil's Minas Gerais state over the next six years. Investments will target mining, steel and cement operations.
CSN operates its Casa de Pedra iron ore mine in Minas Gerais, and expects to see output capacity expand to 65 million tonne by 2011 from the current 16 million tonnes. It also plans to build a 4.5 million tonnes steel mill in the southeast Brazilian state, as well as a 6 million tonnes pellet plant and a steel treatment and distribution center.
Of the total investment for the coming years, projects in the Congonhas municipality are due to receive some BRR 9 billion, of which BRR 6.20 billion will go to the new steel plant, another BRR 850 million to the pellet plant and BRR 2.20 billion for the Casa de Pedra expansion transforming it into the fourth largest iron ore mine in the world.
Arcos city will see investments of BRR 205 million and will be home to a clinker facility and a lime unit, both focused on cement production.
The steel treatment and distribution center, expected to require some BRR 20 million will be installed in Minas Gerais state capital Belo Horizonte.
Rio Tinto to place up to 15 million tonnes iron ore into spot market in 2008
It is reported that Rio Tinto PLC plans to place up to 15 million tonnes of iron ore into the spot market in 2008.
Ro announced that it has sold 1 million tonnes of iron ore in the spot market for January shipment at an average price of USD 187 per tonne and that it had sold a similar volume in December at USD190 per tonne as compared with the current equivalent benchmark price of USD 85 per tonne which includes FY2007 FOB benchmark plus spot freight.
By way of sensitivity, the current difference between the spot iron ore price and the price of iron ore delivered pursuant to 2007 term contracts is about USD 100 per tonne. On 15 million tonnes this would equate to USD 1.5 billion of revenue before tax
Rio Tinto believes that efficient short, medium and long term contracts need to exist in the iron ore industry. At its Investor Seminar on 26 November 2007, Rio Tinto outlined its intention to operate a mix of three pricing approaches:
1. Short-term spot sales;
2. Hybrid contracts, which are based around a frequent pricing adjustment to reflect fair market value. As at November 2007, Rio Tinto had signed some 6.5 million tonnes per annum of hybrid contracts
3. Long term contracts with regular re pricing.
Mr Sam Walsh CEO of Rio Tinto said that bulk of the company's Pilbara capacity in Western Australia is committed under long term contracts and it will continue to honor these contracts. He added that "At the same time the gap between the benchmark and spot prices is huge and we intend to continue to take advantage of those higher prices.”
Japanese steelmakers to increase stakes in each other – Report
Japanese daily Nikkei, without citing sources, reported that Japan's largest steelmaker Nippon Steel Corp, 3rd ranked Sumitomo Metal Industries and 4th ranked Kobe Steel have reached a basic agreement to increase their equity stakes in one another and that the trio is expected to announce the deal as early as today.
As per report
1. Nippon Steel and Sumitomo Metal will spend about JPY 40 billion each to buy shares in each other and Nippon Steel will lift its interest in Sumitomo Metal from 5% to about 7% while Sumitomo will increase its stake in Nippon Steel from 1.8% to almost 3%.
2. Nippon Steel and Kobe Steel will each spend about JPY 10 billion to buy each other's stock. Nippon Steel's share of Kobe Steel is to climb from 2.05% to around 3%.
3. Sumitomo Metal and Kobe Steel will also spend about JPY 10 billion each to boost stakes in each other by 0.5% to 1% point to 2% to 3%
The report said that “The three steelmakers, which decided to expand their business partnerships in October, have been under growing pressure to forge closer ties due to the rapid growth of the world's largest steelmaker, ArcelorMittal.”
Nippon Steel wins 10% price hike on SBQ plates – Report
Reuters reported that Japanese shipbuilding companies have agreed to a 10% price rise on Nippon Steel Corp's thick plate, effective October 1st 2007, a factor boosting its second half profit above the company's forecast.
An industry source said that price hikes on shipbuilding plate and other products starting in the second half and rising export prices have not been taken into account in Japanese steelmakers' profit estimates for the year to March 2008. It said that the 10% rise is seen equaling a JPY 7,000 to JPY 8,000 yen rise per tonne. The price hike is for a fifth consecutive year.
JFE Holdings Inc, the world's third biggest steelmaker, said in October it was in talks to raise the price of thick steel plate by 15%.
Demand for thick plate used in ships, construction and other machinery remains tight amid strong economic expansion in emerging markets while the prices of Japanese steelmakers' products are still low compared to foreign rivals.
Brazil cut down exports of steel product
YIEH reported that Brazil’s steel mills have cut down the export of steel products to meet the strong demand in domestic market.
The sales volume in the January to October 2007 for domestic market totaled 16.9 million tones up by 15.6% YoY as compared to January to October 2006.
Some traders also indicated, most mills decide not to export for medium heavy plate, galvanized plate, rebar and wire word in this moment, but small amount of HR and CR coils/plates have been exported.
Currently, the export price of plate billet to Asia is between FOB USD 480 per tonne to USD 490 per tonne and to Europe is at FOB USD 500 per tonne.
Esmark to continue perusing Sparrows Point transaction
Esmark Incorporated confirmed that it has received notice that ArcelorMittal USA has terminated the Purchase and Sale Agreement entered into with E2 Acquisition Corporation to purchase substantially all of the assets of the Sparrows Point business.
Esmark said that if the acquisition would have been completed, it would have owned approximately 2% of the equity of E2 Acquisition Corporation. Both the United Steelworkers and the court appointed trustee that will oversee the Sparrows Point divestiture have encouraged E2 to remain active in the sale process.
Esmark Incorporated plans to continue its efforts to participate in the purchase of the Sparrows Point business and will also continue its discussions with the United Steelworkers for support and approval of such a transaction.
US weekly crude steel production up by 18.6%YoY
American Iron & Steel Industries reported that in the week ending December 15th 2007, US’s raw steel production was 2.057 million net tons while the capability utilization rate was 86.2%. Production was 1.733 million net tons in the week ending December 15th 2006 while the capability utilization then was 75%. The current week production represents 18.6% YoY increase from the same period in 2006.
Production for the week ending December 15th 2007 is down by 1.9% from the previous week ending December 8th 2007 when production was 2.064 million net tons and the rate of capability utilization was 86.5%.
Adjusted YTD production through December 15th 2007 was 102.351 million net tons at a capability utilization rate of 86%. That is a 2.3% YoY decrease from the 104.787 million net tons during the same period 2006 when the capability utilization rate was 87.5%.
AISI’s estimate is based on reports from companies representing about 75% of the US’s raw steel capability and includes revisions for previous months.
POSCO to invest USD 170 million in molybdenum in US
General Moly Inc announced that it has entered into a letter of intent with POSCO, pursuant to which POSCO will have the right to acquire a 20% interest in General Moly's Mount Hope molybdenum project, subject to negotiation and execution of final documentation.
In order to facilitate the investment, General Moly intends to form a new entity that will operate the Mount Hope Project on a joint venture basis. Pursuant to the letter of intent, it is anticipated that POSCO will make equity contributions to the joint venture totaling USD 170 million. Payments by POSCO are anticipated to be USD 50 million upon signing of definitive documentation, USD 50 million on July 1, 2008 and USD 70 million upon receipt of all material permits required to initiate full construction of the Mount Hope Project, which is expected in the first quarter of 2009.
It is also anticipated that POSCO will have rights to 20% of production from the Mount Hope Project and will be responsible for 20% of total project capital and operating costs from January 1st 2008 onward.
US steelmakers endorse sectoral approach to addressing climate change
Responding to the International Iron and Steel Institute’s address on climate change delivered during the UNFCCC COP 13 meeting this week in Bali, the American Iron and Steel Institute has endorsed the global sectoral approach to address climate change.
AISI agreed that "This type of global approach is required if a future emissions regulatory regime is to deliver meaningful reductions in greenhouse gas emissions worldwide."
Mr Andrew G Sharkey III president & CEO of AISI said that "We are a strategic industry, essential to the world’s economic growth and stability and fundamental to all manufacturing. That’s why we see global steel consumption at well over 1 billion tons."
Mr Sharkey said that "The steel sector is part of a climate change solution. Both globally and in the US America’s steel industry has reduced its energy intensity per ton of steel shipped by 29% since 1990. American steelmakers lead the way in recycling and environmental performance. We are ahead of Kyoto greenhouse emission goals by 240% and we are committed to research necessary to develop innovative technologies to continue this trend."
Italian steel pipes market weaken due to high stocks
YIEH reported that recently Italian steel pipes market is difficult because there is high stocks and weak demand and the prices went down.
According to some estimates, the market is hardly to come back before the Christmas holiday. It added that the strongly rising of steel pipe's prices encouraged large purchases in the early of this year which increased stocks, furthermore it impacted the market since September. In addition, the drop of demand from construction sector pulled down the prices of pipes.
It is estimated that the market is hardly to improve before the holiday. However, whereas Chinese welded pipes will give up the market and cost is going up, it will support prices to go up in the first quarter of 2008.
ArcelorMittal announces the start of its new 44 share buy back program
ArcelorMittal announced the completion as of December 13th 2007 of the 27 million shares buy back program as announced on June 12th 2007. The shares were repurchased at an average price of EUR 50.15 per share and for a total amount of EUR 1,354 million.
ArcelorMittal also announced the start of its share buy back program for up to 44 million shares, which has been announced on December 12. This program has a 2 year term, and shares bought under this program may be used in potential future corporate opportunities or for cancellation.
To initiate and execute the first part of this program, ArcelorMittal has given a mandate to SG Securities sas with the following terms:
1. Maximum price: the price per ArcelorMittal share will not exceed 120% of the 12 months moving average closing price on the market on which the transactions are made. For off-market transactions, the maximum purchase price will be 120% of the 12 months moving average closing trading price on Euronext Paris.
2. Minimum price: the price paid will be no less than the par value of the share at the time of repurchase.
3. Timing: this share buy-back mandate is expected to start on December 18, 2007 and shall end at the earliest of (i) February 18, 2008 and (ii) the moment on which the number shares acquired by ArcelorMittal since the start of this mandate attains 6 million shares.
Tokyo Steel to hike steel prices
Tokyo Steel Manufacturing announced an increase the selling price by JPY 3,000 per tonne for sheet steel and wire rod for distributors for January order due to higher global levels and lower yen rate.
Tokyo Steel increased prices of hot rolled coil, pickling steel, hot rolled flat steel, checkered coil and checkered plate after 2,000 yen hike for hot coil for December order.
CSC predicts strong results for 2008
China Steel Corp predicted that its revenues and profits in the coming year would maintain high level in the latest years as the steel prices are predicted to maintain on higher grounds when downstream demand is estimated to be unchanged.
Due to inspiring demand side, CSC officials predicted the profits of the company are likely to maintain the level of TWD 60 billion in 2008. Yet, in the final quarter of this year, the profits of CSC are predicted to suffer slightly in wake of higher costs in transportation.
US nickel scrap export drops by 1.6% MoM
YIEH reported that US exported 4,354 tonnes of nickel scrap in October 2007, decreased by 1.6% MoM. The average price of nickel scrap was USD 5,038.7 per tonne dropping by 6% MoM and the total export of nickel scrap was 65,045 tonnes from January to October 2007, up by 96.7% YoY compare to 2006.
In October, US nickel scrap was mainly exported to the following countries.
1. Canada imported 2,761 tons, down by 9.9%
2. Japan imported 1,303 tons, up by 15.4%
3. England imported 139 tons, up by 3.8%
4. Sweden imported 62 tons, increased by 0.2%
5. Australia imported 52 tons up by 4.8%
Sumitomo sets up mine subsidiary in Chile
Sumitomo Metal Mining Co announced that it has established a subsidiary in Chile to expand its mining operations in the South American country, which is rich in large deposits of metals, including copper and gold.
Sumitomo said that the new firm, Sumitomo Metal Mining Chile LTDA, will take over from an existing representative office in Santiago a U.S. subsidiary has run to operate its mining business in Chile, which included managing its Candelaria copper mine in the northern part of the country.
New air emission standards to reduce mercury release
It is reported that US EPA has issued new air emissions standards that will reduce mercury releases from steel manufacturers using electric arc furnaces. The rule requires steel making facilities to buy motor vehicle scrap from providers that participate in an EPA approved program for the removal of mercury switches.
This program, the National Vehicle Mercury Switch Recovery Program, is designed to remove mercury containing switches from scrap vehicles before the vehicles are flattened, shredded, and melted to make new steel. These switches were used for lighting in hoods and trunks and in some anti-lock braking systems of many vehicles manufactured prior to 2003.
The standards will prevent the release of about five tons of mercury in to the air each year. In addition, the rule will reduce emissions of other toxic metals such as lead, manganese, nickel and chromium by about 52 tons per year and particulate emissions by about 865 tons per year.
Rautaruukki sees extra EUR 3 to 5 million CO2 costs
Reuters reported that Finnish steel maker Rautaruukki is expects to spend about EUR 3 million to EUR 5 million on the additional emissions allowances it needs during the 2008-2012 emissions trading period.
Rautaruukki said its Raahe plant would receive 91% of the maximum emissions allowances required for the period starting next year and its steam boilers in Hameenlinna would receive 86%.
Chilean builders considering to import steel
YIEH reported that some major steel suppliers in Chile including CAP and Gerdau Aza determined to raise steel prices by 6.2%.
The report added that some main steel distributors, for example, Sodimac, Easy and Construmart had also informed customers of the increase of prices.
Some large builders indicated that the rise of prices will greatly influence some projects afterwards and they start to consider direct import of steel.
Nippon’s unit develops platinum free catalyst for exhaust purifiers
Jiji Press reported that Nippon Steel Materials Co has developed a platinum free catalyst for exhaust gas purifiers for gasoline engines. The catalyst will be about 70% cheaper than conventional catalysts because it also uses a less amount of rhodium, another precious metal.
Nippon Steel materials, a fully owned unit of Japan's leading steelmaker Nippon Steel Corp, has supplied the catalyst to motorcycle makers to test its performance. It hopes that the catalyst will be used as well for exhaust gas purifiers for diesel-powered automobiles, demand for which is expected to increase.
Currently available catalysts are made by adhering micro particles of platinum, palladium and rhodium to aluminum oxides.
Nippon Steel Materials succeeded in reducing the amount of precious metals used for its newly developed catalyst by using three types of ferrioxide instead of aluminum oxides.
Odlewnie Polskie bags contract in Germany
Odlewnie Polskie SA announced that it has received a contract signed by its German partner for the steel alteration services in factories in Germany.
The release added that the value of the contract is EUR 1,843,370 and the agreement will be realized from January 1st 2008 until December 31st 2008.
Kobe Steel's senior unsecured debt ratings raised to 'Baa2'
Thomson Financial reported that Moody's Investors Service has upgraded the senior unsecured debt ratings of Kobe Steel Ltd and its supported subsidiaries to 'Baa2' from 'Baa3' with a positive outlook, citing the expectation that the Japanese integrated steel maker's strengthening overall profitability will be sustained over the intermediate term due to diversifying earnings sources and focus on product differentiation.
Moody said that the positive outlook reflects the view that continuing to reduce financial leverage, which is relatively high compared to its peers, would further improve Kobe's credit profile. It added that the solid earnings will provide financial resources for the company to adequately manage its capital structure despite growing needs for capital investments.
Moody said that Kobe's earnings from its core steel operation have been constrained by internal cost factors and increasing raw material procurement costs. However, growing contribution from other parts of its diversified business and product portfolio has mitigated the constraint and helped Kobe maintain its higher level of overall profits than in the past cycles.
National Coal Corp's senior secured rating raised to 'CCC' - S&P
Thomson Financial reported that Standard & Poor's has raised its rating on the USD 55 million senior secured notes of National Coal Corp to 'CCC' from 'CCC-'.
The ratings agency assigned its '3' recovery rating to the notes, indicating the expectation of meaningful recovery in the event of a payment default.
S&P said the rating on the thermal coal producer reflect high cost profile, delays in meeting aggressive production goals and operational challenges that have all contributed to operating losses and a tight liquidity position.
PSM called to increase its capacity
News Daily reported that Mr Salmaan Taseer caretaker federal minister for industries, production & special initiatives has asked the management of the Pakistan Steel Mills to strive for enhancement of its capacity.
Mr Taseer, during a visit to the mills, said that “The demand for steel in the international market was growing rapidly, so the enhancement of capacity of the mills should be the top priority.”
Major General (Retired) Muhammad Javed chairman of PSM briefed the minister about the performance of the mills. He told that “PSM earned a profit of PKR 4.6 billion during the last financial year with capacity utilization of 89%.”
He later told reporters that PSM is likely to earn a net profit of more than PKR 3 billion during the current financial year.
He said the mills have started preparations for manufacturing special high-grade steel for automotive manufacturers. He said the automotive industry would be able to sell it at a 10 times higher price after value addition.
Ultra Construction bags pipeline deal in Qatar
It is reported that South Korean builder Ultra Construction and Engineering Co has won a USD 357.4 million order to build drain pipelines in Qatar.
As per report, the 3 year project was awarded by Qatar’s public work authorities.
India allocates INR 746 crores to build road in Afghanistan
It is reported that the Indian cabinet has recently approved INR 746 crores for the construction of a strategic 218 kilometer road from Zaranj to Delaram in Afghanistan to have improved access to Central Asia.
As per report, the road to be built by India’s Border Roads Organization, is close to the Iran and Pakistan borders. It will be completed by December 2008 and will give Afghanistan access to Iran’s Chabahar port.
The Asian Age newspaper reported the road project is one of the most ambitious projects undertaken by India in Afghanistan. As many as 300 Indians protected by the Indo-Tibetan Border Police are working on the strategic road between Zaranj and Delaram. The road will shorten the distance to Chabahar port by as much as 600 kilometer for the Afghans.
Al Zazeera appoints 4 directors
It is reported that the share holders of Al Zazeera Steel Product Company in their general body meeting held on December 17th 2007 approved the appointment of the following 4 board members.
1. Mr Saleh Nasser Aboud Al-Habsi
2. Mr Omar M Elquqa
3. Mr Shailesh Kumar Dash
4. Mr Joseph Joseph
Emaar named “Property Company of the Year”
Khaleej Times reported that Emaar Properties has won the “Property Company of the Year” for the second time in a row at the Arabian Business Achievement Awards.
Mr Ahmad Al Matrooshi MD UAE of Emaar Properties received the award from Sultan bin Saeed Al Mansouri, Minister of State for Governmental Sector Development, at the Arabian Business Achievement Awards.
The award recognizes the overall performance of the company including product quality, service and growth strategies.
LME approves membership for BLME
The London Metal Exchange announced that its board has approved an application for category 4 associate broker membership from the Bank of London and the Middle East.
Bank of London and the Middle East is a Sharia’a compliant wholesale bank. Its major shareholder is the Kuwait based Boubyan Bank.
Sohar power and desalination plant becomes operational
Khaleej times reported that Mr Sayyid Mansoor bin Majid Al Said minister of heritage & culture of Oman has recently inaugurated the USD 550 million Sohar independent power and desalination plant in Sohar in Oman's Batinah region.
The plant is now in full commercial operation and able to deliver its full combined cycle capacity of 585 MW at 50 degree Celsius ambient temperature to the main Oman interconnected system.
The power plant is coupled to a desalination plant, which is able to deliver 33 million gallons or 150,000 cubic meters per day of drinking water per day.
ThyssenKrupp to launch twin car lift system in MEA
Arabian Business reported that German elevator manufacturer ThyssenKrupp is targeting high rise projects in the Middle East with its twin system in which two lift cars run independently in the same shaft and is close to signing deals on a number of tower projects which scale up to 60 storey.
Mr Karl Schöllkopf senior engineer and manager of international project support and consulting of ThyssenKrupp Elevator said that "We are very close to some deals. But it is a new product and with any new product it takes time to be accepted by the market consultants and customers need to understand how it works. And with this new system, it will be very important for us to be involved in the project from the earliest stage."
Mr Schöllkopf said that the use of two lift cars in one shaft makes it possible to transport a larger number of people faster to their destination compared with a conventional solution. He added that "The cars are not connected and can move independently to different floors using the same guide way. With the same number of shafts, the twin has a much greater transportation capacity. A further advantage is the saving of construction volume, every shaft saved frees up valuable building and rental space."
He said that ThyssenKrupp plans to start a training program to ensure lift installation and maintenance staff is fully up to speed with the new system. He added that "Most of the people we employ are involved in installation and maintenance, and it is necessary to train them individually. So together with the first project, we will start a program to make sure people know how to install the system. There will also be a lot of support coming from overseas."
It is noted that ThyssenKrupp Elevator secured a deal worth AED 550 million in 2005 to supply elevators, escalators, moving walks and passenger boarding bridges for the new Dubai International Airport.
Syria Iraq pipeline to reopen within 2 years - Report
Mr Sufian Allaw oil minister of Syria said that a pipeline linking Iraq's northern oilfields with Syria's Mediterranean coastline will be operational within two years but added that it needs repairs in Iraq.
He informed that a Russian company would travel to Iraq on January 10th 2008 to inspect the pipeline for needed repairs.
Mr Assem Jihad spokesman for Iraq's oil ministry said that it had been impossible to repair the line before because security was too tenuous. He added that "But now with the improved security situation and the increase in oil production, we are planning to increase our export outlets."
Mr Jihad said that Iraq produces about 2.5 million barrels per day but far below what its reserves could handle. The oil sector has suffered from decades of Saddam Hussein era mismanagement, UN sanctions, and the effects of the current war. He added that "This pipeline would pump around 250,000 barrels a day through the Syrian ports."
It is noted that Syria had shut down the pipeline in 1982 and reopened in late 2000 as relations with Baghdad thawed, but was closed again with the 2003 US invasion of Iraq. Mr Hoshyar Zebari foreign minister of Iraq has recently announced that the pipeline linking the oil rich city of Kirkuk with the Syrian port of Banias would reopen.
Kuwaiti firms eyeing mega infrastructure deal in Philippines
Kuwaiti newspaper Al Qabas reported that Kuwaiti companies including Agility are poised to clinch a USD 10 billion contract to build an airport and other infrastructure in the Philippines.
The contract involves building an airport, a power station and a railway line and other infrastructure at a location about 20 kilometers from the Philippine capital Manila.
The report added that Agility, a logistics company that supplies US forces in Iraq and Afghanistan and Abraj Holding are among the firms that would sign a contract within 2 days.
However, Abraj in a statement said that “No memorandum of understanding has been reached yet.”
Pakistan to develop road and rail networks for better trade
Mr Pervez Musharraf president of Pakistan, emphasizing the importance of communication network in national economic development, announced that a comprehensive plan is underway to provide efficient inter country and trade linkages with regional countries.
Mr Musharraf said that the north south road and rail infrastructure is being developed at a fast pace and several projects would be completed in 3 to 4 years.
He said that National Highway Authority of Pakistan is working on several major projects worth PKR 175 billion. He added that NHAP is constructing bypass roads for all major cities including Karachi, Lahore, Peshawar, Rawalpindi and working on 8 bridges over the Indus River.
Mr Musharraf said that Pakistan government is concentrating more on the less developed areas. He also pointed several farm to market roads completed recently were providing quicker mode of transport and yielding better profits for the farmers. He said Gwadar is a strategic port and was being developed as a major container terminal. He said the 950 kilometer long Gwadar Turbat Ratodero would link the port to the Indus Highway. He said the fund for the development of northern areas has risen by 1500% to PKR 7.5 billion from PKR 0.5 billion in 5 years.
He also pointed at the importance of railways as an efficient and cheap mode of transportation. He said in the past few years the Pakistan Railways has improved significantly, with several new trains that were transporting people and cargo swiftly. However he added that there is still room for improvement as this vital sector was neglected in the past and said 1500 wagons and 150 locomotives were added to the fleet.
Iran resume talks with Pakistan on IPI pipeline
It is reported that Iran and Pakistan have begun a new round of negotiations on the pipeline project and are holding talks in Tehran on the few remaining issues of the long awaited contract on the Iran Pakistan India gas pipeline project. The previous round of talk, between the 2 countries, was held in Islamabad recently.
Mr Hojjatollah Ghanimifard oil ministry's special envoy for IPI talks, said earlier in November 2007 that Iran Pakistan delegations reached a final agreement in Tehran on the text of the contract.
Meanwhile, Mr MS Srinivasan petroleum secretary of India said that India would go ahead with the project as talks between Tehran and Islamabad are progressing.
It I noted that Iran, Pakistan and India held tripartite negotiations over the project until recently, but New Delhi's vacillation made Tehran and Islamabad determined to continue talks bilaterally.
Iran ready to help Iraq's housing sector
Mr Mohammad Saeedi Kia minister of housing & urban development of Iran said that Iran is ready to help Iraq in all economic sectors, especially housing and construction of roads.
Mr Kia, in a meeting with an Iraqi delegation headed by Ms Bayan Dizayee minister of housing & construction of Iraq, has referred to Iran's capabilities and experience in implementation of housing projects. He added that Iran was willing to help its neighboring country in this sector.
Referring the project underway in Iran to build 1.5 million housing units every year, Mr Kia said that Iran has so far built 22 new cities within a 30 kilometer distance of its metropolitan centers, some of which have populations of well over half a million.
Ms Dizayee said that Iraq was planning to build 2.5 million housing units by 2010. She added that Iraq expected active participation by Iranian companies in this endeavor. Iranian construction companies are already active in a number of construction projects in northern and southern Iraq. Iraq is to pass a foreign investment bill in 2008 and the ministry of construction expects to get the lion's share of investments made by foreign companies.
The value of trade between Iran and Iraq in 2007 would exceed USD 1.4 billion up by 8% YoY.
Iran and Turkey trade set to hit USD 8 billion in 2007
Press TV quoted Mr Kursad Tuzmen state minister of Turkey as saying that transactions between Iran and Turkey will exceed USD 8 billion by the end of 2007 following the rising oil and gas prices. He added that mounting prices contributed to the increase and resulted in a trade deficit of USD 5.5 billion for Turkey.
Mr Tuzmen said that Iran Turkey trade rose from USD 1.3 billion in 2002 to USD 6.7 billion in 2006 and the figure would hit USD 10 billion in 2008. He added that Iran and Turkey trade USD 2 billion worth of non oil commodities each year.
It is noted that Iran and Turkey signed an agreement in the 3 day Joint Economic & Trade Commission meeting in Ankara in Turkey.
Mr Masoud Mir Kazemi commerce minister of Iran hoped the ground would be paved for the expansion of cooperation between private sectors of the neighboring countries.
Sinopec may triple Iranian crude imports in 2008
It is reported that China’s top refiner Sinopec Corporation will nearly triple its imports of Iranian crude in 2008 as Sinopec Group, parent company of Sinopec Corporation, has agreed to buy 160,000 barrels per day from Iran in 2008, up from this year’s 60,000 barrels per day.
Including a separate pact, agreed earlier between China’s state run Zhuhai Zhenrong Corporation and National Iranian Oil Company, China has contracted to buy 400,000 barrels per day of Iranian crude for next year, roughly 6% of China’s total crude demand.
The supply deal comes days after Sinopec finalized a USD 2 billion pact to develop Iran’s huge Yadavaran oilfield. Analysts saw the deal as a further sign of a long term strategic relationship between China and Iran. Beijing is scrambling to fuel the world’s fastest growing major economy and Tehran is relying on oil revenue to establish itself as a dominant Middle Eastern power.
A National Iranian Oil Company source said that the deal is linked to the Yadavaran investment. It added that “This is a service type contract, they are taking more of our crude because they have invested heavily in our Yadavaran field and it is like payment for the investment.”
China may extend spot purchases from Iran for next year, to meet strong fresh demand from the country’s new refining facilities. Beijing has been reluctant to back a US led drive for further sanctions against Iran, seeing it as a key oil supplier as China’s crude imports soar to meet half of its demand. In a push to boost the use of natural gas to curb dependence on oil that now costs nearly USD 100 a barrel, China is also interested in Iran’s rich gas reserves. Apart from the 2 crude pacts, China buys fuel oil, a heavy refinery product from Iran under a one year contract of around 1 million tonne.
Increase in steel export tax in January coming closer
Interfax reported that the Chinese government plans to increase the export tax on steel billet and long products on January 1st in 2008.
A spokesman from unknown source told Intefax that “Beijing will raise the export tax on steel billet from a current 20% to 25% and on long products, such as rebar and wire, from the current 10% to 15% on January 1st 2008. The policy has been long discussed by government departments, who are eager to curb the growth of China’s huge trade surplus.” He however said the export tax on flat products, including hot rolled coil and cold rolled sheet, will remain unchanged next year.
Mr Li Xiaohong analysts with Tebon Securities told Interfax that “However, although the strengthened export regulations are expected to reduce domestic steel product exports next year, steel product prices in the domestic market will not see substantial reductions.”
He added that "When the Chinese government imposed a 5% to 10% export tax on more than 80 types of steel product on 1 June this year, most analysts believed that reduced exports would pull down steel product prices in the domestic market. Whereas in fact, there was no downturn in the domestic steel product market and prices soared to new highs.”
He concluded that "I believe that the domestic steel product market will maintain this momentum next year, as the main factor pushing up steel product prices is rising raw material costs. Exports only take up just over 10% of Chinese steel product output and as such will not be the determining factor in market prices.”
China's growing steel product exports have recently come under fire from both foreign steel mills and governments for receiving Chinese government subsidies. The European Union kicked off an investigation last Friday into whether Chinese steel products are undercutting prices in the European market and damaging the interests of local steel mills, China's Ministry of Commerce announced last Saturday.
ArcelorMittal gets nod to increase stake in Hunan Valin – Report
Bloomberg reported that ArcelorMittal has won approval to increase its minority stake in Hunan Valin Steel Tube & Wire Co and now could buy almost half the 520 million new shares sold by Valin Steel thus increasing its stake to 33.02% from 29.5%.
Hunan Valin n a statement to the Shenzhen exchange said that ArcelorMittal would not have to make a general offer for Valin Steel's remaining shares following its stake increase.
It added that “Hunan Valin Iron & Steel Group, Valin Steel's parent, will increase its stake to 33.9% in the Shanghai-listed unit after the share sale.” The parent had a 29.99% stake as of June 30th 2007.
Valin Steel said that details of the share offer will be announced today.
Construction rebar and WRC export price surge
It is reported that Chinese rebar and wire rod export offers have seen substantial rise since early December to reflect the jump in domestic market prices.
As per report, quotations for rebar have jumped to USD 670 per tonne to USD 680 per tonne on FOB basis and that for wire rod are at USD 660 per tonne to USD 670 per tonne in FOB basis.
WISCO plans to build 12 overseas companies by 2010
Mr Sun Wendong general manager of the trading unit of WISCO disclosed that WISCO would have 10 to 12 overseas plants by 2010 which is expected to come on stream around the spring festival.
According to the reports, WISCO upgraded two offices in Japan and Germany respectively into wholly owned subsidiary at the start of this year. After several months, three trading companies were set up in Hong Kong, Australia and India respectively.
Further source says WISCO's Hong Kong based shipping company as well as a trading unit in US are also set to be incorporated very soon, while study on erecting more in Brazil, South Africa, Canada and South Korea is carrying on.
Spokesman of the Wuhan headquartered company said this is in line with their strategy that would help double win of purchase and sales. He said that “Through overseas companies as platform, we can collect economic information of the whole world and deepen contacts with global suppliers and big buyers also, it is easy to find opportunities to invest in iron ore, coal, alloy mines and steel and processing mills."
Shandong Province pushing for Jinan and Laiwu merger
China Times reported that Shandong Province has recently released a blueprint regarding provincial steel consolidation and capacity control, as the merger between Laiwu Steel and Jinan Steel Group is progressing slowly. As per report, Shandong Province is determined to speed up the merger of the above two.
The planned Shandong Steel Group would have an annual steel capacity of 31.6 million tonne representing 70% of the province's total capacity.
Sources close to the deal told the newspaper that “Neither Jinan nor Laiwu is enthusiastic about the merger. In fact, the product mix of the two is not complimentary. Appointing chairman for the new steel group stemmed from two steel mills with almost the same size is also a problem."
The report added that "Laiwu intends to focus on H-beam products in the future, while Jinan looks to extend its product mix. Laiwu is in discussion with a host of major steel mills at the moment as it eyes to introduce strategic investors for beefing up its competitiveness."
Jinan Steel, led by Mr Li Changshun, has vaulted into one of China's biggest medium plate producers, with steel output of 10.42 million tons in 2006. So far, it accounts for 14% of China's medium plate output and has ranked as the country's biggest exporter of medium plate over the years.
On the other hand Mr Jiang Kaiwen chairman of Laiwu Steel Group has brought Laiwu to be China's top H-beam producer with steel output of 10.34 million tonnes in 200 6 accounting for 70% of 300mm H-beam products market share in China.
Chinese steel maker investing in Apollo Minerals
It is reported that newly listed diversified Australian resources company Apollo Minerals Limited has signed a MoU with a Chinese Iron and Steel Group for the sale of iron ore from its recently acquired iron ore project.
Apollo said the Chinese iron and steel group would immediately acquire 4% of the company for AUD 1 million, a 36% premium to the IPO price in October 2007. Under the terms of the transaction the Chinese iron and steel group has the option to subscribe for up to AUD 3.3 million in Apollo shares at 34 cents per share and take an interest over 15% in Apollo subject to relevant approvals.
In November Apollo signed an option agreement for the acquisition of an 80% interest in exploration license applications 47/1378 and 47/1379. It said the two tenement applications cover a significant portion of the newly discovered Mt Oscar Iron Ore Project, located in the Pilbara region of Western Australia.
Mr Sevag Chalabian chairman of Apllo said the Mount Oscar Iron Ore Project offered exciting opportunities for the company. He said “To have attracted such a committed Chinese partner so soon after listing is something that will provide us with significant strength and impetus as we move forward with this project’s development.”
Apollo said it is currently conducting due diligence on the tenements and subject to the successful completion of this due diligence, the company expects to acquire the tenements and commence an aggressive exploration program by March 2008.
Chinese H Beam export price skyrockets
It is reported that H beam export offer in China has jumped up again following the surge in domestic market prices recently.
Laiwu Steel raises its offer to USD 800 per tonne CFR to USD 810 per tonne CFR for shipments to South Korea for February shipments although Maanshan Steel is reported to be looking at USD 740 per tonne USD 750 per tonne CFR.
Traders in South Korea said that there is strong likelihood that Laiwu Steel is not prepared to export at moment due to robust domestic prices.
They however added that even USD 740 per tonne to USD 750 per tonne CFR by Maanshan is not workable now since its equivalent landed price in South Korea is KRW 690,000 per tonne to KRW 695,000 per tonne, which is more that prevailing market price of KRW 650,000 per tonne in South Korea. It makes imports of Chinese origin H beam into South Korea unworkable till the time domestic prices increase by KRW 70,000 per tonne.
On the other hand, Mysteel also reported that Hebei Jinxi concluded 15000 tonnes of H beam export order to South East Asia at about USD 680 per tonne on FOB basis in early November.
Tianjin Port inks strategic framework agreement with Baosteel
It is reported that Tianjin Port Group signed strategic framework agreement with Baosteel on December 17th 2007.
Under the agreement, the two parties will take the logistics of raw materials and finished products as well as related service as main points to promote mutual and strategic cooperation in supply, transport, processing, store, delivery, service and related investment.
Ms An WeiBing of Tianjin Port Group said that “Strategic cooperation with such large enterprises can help Tianjin Port attract more large customers and to be a cargo hub in north of china.
It is understood that Tianjin Port will sign strategic cooperation framework agreement with a series of large clients in the next step.
Chinese steelmaker upbeat about lower iron ore price
It is reported that Ore concentrate price has shown sign of weakening recently in Tangshan as local mills are holding back amid softening steel prices. In contrast, ore miners are quite keen to conclude deals in light of the greasy profit. However, both traders and end users are staying away from the market due to the rampant steel price rally, leading to slow off take at the mills. As a result, steelmakers are not eager to replenish ore stock any more.
Meanwhile, the competitive price of ore concentrate from Northeast China suppliers has attracted increasing supply, which has weighed on local ore price downward. Local mills are also less dependent on local ore concentrate. Some of them have turned to lower grade spot ore imports stockpiled at the ports in light of expensive local ore concentrate.
Moreover, ore concentrate price is set to rise further on anticipation that benchmark ore imports price would increase big rise for fiscal 2008. Industrial insiders expect that ore concentrate price to inch upward again at the end of December or early January once domestic steel market picks up.
Jinan Steel forecasts 50% increase in profits in 2007
It is reported that Shandong based Jinan Iron and Steel Co Ltd expects its 2007 net profit to rise by 50% or more from a year earlier, boosted by cost reductions and higher steel prices.
As per report, Jinan has made serious efforts in 2007 in energy saving and emission reduction to develop circular economy. It has also optimized product mix and raised product quality. Besides, prices for steel products have climbed compared with those in last year.
Jinan Iron and Steel Co Ltd said in a statement it had posted a net profit of CNY 871.56 million in 2006 or CNY 0.77 per share.
Xiangtan Iron & Steel increase steel prices
YIEH reported that China Xiangtan Steel announced to increase the steel price and this new price will be effective from December 16th.
The price hike covers CNY 400 per tonne for steel wire, CNY 100 per tonne for rebar CNY 210 per tonne for round bar and CNY 200 per tone for billet.
The current price including tax for HRB400 rebar of diameter 18mm to 25mm is about CNY 5,050 per tonne.
China to restrain investment in new copper and aluminum
According to the National Development and Reform Commission Chinese government will continue to restrain investment in new copper and aluminum smelting projects in a bid to curb high energy consumption.
China will limit investment in crude copper smelting projects with annual production capacity under 100,000 tonnes. Also, new crude copper smelting projects that consume more than 550 kilograms of standard coal per tonne of copper produced and copper refining projects that consume than 250 kilograms of standard coal per tonne of copper produced will have investment limited.
The NDRC will also continue to control investment in new alumina projects that consume less than 800,000 tonnes of domestic bauxite per annum or 600,000 tonnes of imported bauxite per annum. Furthermore, the NDRC will restrain investment in new secondary aluminum projects that have an annual production capacity of less than 50,000 tonnes and aluminum fabrication projects with annual capacity below 100,000 tonnes.
In addition, the guidelines state that China will not be encouraging investment in hot-rolled strip projects, galvanized sheet projects that have less than 250,000 tonnes of annual production capacity or color coated plate projects with less than 100,000 tonnes of annual capacity.
The NDRC is also halting secondary lead projects with annual production capacity below 100,000 tonnes.
ADB provides loan to improve Chinese railway network
It is reported that The Asian Development Bank is providing a USD 100 million loan to help develop an efficient and effective emergency management system for China's railway system.
ADB said in a statement that the Railway Safety Enhancement Project will also receive USD 40 million from the Ministry of Railways to complete the funding requirement. And the new technology will enable the railway system to respond more quickly to emergencies, reduce restoration time and enhance safety.
ADB said that the successful implementation of the project will lead to improved reliability, higher mobility, increased network capacity, optimal use of the railway network and other related assets and increased staff productivity.
ADB said at the end of 2006, China's railway system spanned 77,000 kilometers. The country's rail system has the highest freight transport density in the world and the second highest passenger transport density next to Japan.
China crude output in November up by 1%YoY
The National Bureau of Statistics said China produced 15.31 million tonnes of crude oil in November 2007 up by 1%YoY.
It said Gasoline output was up 4.7%YoY at 5.05 million tonnes, kerosene output rose 27.8% to 923,600 tonnes and diesel output grew 6.1% to 10.57 million tonnes.
China produced 211.92 million tonnes of crude coal in November 2007 by up 8% in 2006 while coke output rose 12.3% to 28.54 million tonnes.
October iron ore output stood at 59.84 million tonnes up by 13.6%while cement output rose 12.2% to 28.78 million tonnes.
ArcelorMittal signs pact a Greenfield steel plant in Russia
ArcelorMittal announced that it has signed an agreement with the administration of the Tver region in Russia that will lead to the creation of a Greenfield long carbon steel production unit. Work on the site will start during Q2 of 2008 and commissioning of the mill is scheduled for the beginning of 2010.
The objective of the agreement is to make available to ArcelorMittal the land required to build a steel complex consisting of an electric arc furnace with a capacity of 1 million ton of steel, and of two bar mills. This steel complex will be built in 2 phases. In the first phase, a bar mill with a capacity of 600,000 tonnes of rebars and merchant bars will be built. This first phase represents an investment of around USD 100 million. The feasibility study on the second phase of the project will begin shortly.
Mr Malay Mukherjee member of ArcelorMittal's Group Management Board said "I am very excited about this project, as this will become our first steel production unit in Russia. The mill in Tver will give us exposure to a construction sector which is expected to grow at a yearly rate above 10%. In addition to deploying its recognized expertise in management, production and marketing, ArcelorMittal will also implement in Tver world class practices in areas such as health and safety, environment and training."
MMK to set up iron ore operations in the Belgorod Region
It is reported that a resolution on the creation of a branch was passed by the OJSC MMK Board of Directors on December 14th 2007.
The task of the new branch of OJSC MMK named “Prioskolsky Iron Ore Mining and Beneficiation Plant” to be located in the city of Stary Oskol, will be to implement the project of developing the Prioskolsky Iron Ore Deposit under the federal license awarded to OJSC MMK in December of 2006 as a result of an auction.
MMK release said that “The setting up of the branch in the Belgorod Region will secure MMK divisions’ direct involvement in solving the technological, legal and financial issues of the project and accelerate the process of obtaining relevant approvals and permits for the project. In the future the branch may be converted into an independent legal entity.”
The Prioskolsky Iron Ore Deposit is located in the south east part of the Stary Oskol District of the Belgorod Region at a distance of about 2,000 kilometers from MMK. The deposit contains 45.2 million tonnes of high grade ore and over 2 billion tonnes of ferruginous quartzites as confirmed by the Russian Federal Reserves Committee.
According to MMK’s plans, the construction of the Prioskolsky Iron Ore Mining and Beneficiation Plant will start as early as 2009, with the design capacity to be reached by 2016. It is expected that the Plant will mine up to 35 million tonnes of raw iron ore and produce about 15 million tonnes of iron pre pellets and concentrate per year, which, adding the supply from the Bakal Mine and MMK’s captive mining facility, will allow to completely cover the Company’s requirement for iron ore materials.
In September of 2007, Mr Victor Rashnikov chairman of MMK and Mr Yevgueny Savchenko, governor of the Belgorod Region, had signed an agreement on Socio Economic Cooperation between MMK and the Belgorod Region.
Evraz commences tender offer to acquire Claymont Steel
Evraz Group SA and Claymont Steel Holdings Inc announced that Evraz, through its wholly owned subsidiary Titan Acquisition Sub Inc, is commencing a cash tender offer to purchase all outstanding shares of common stock of Claymont Steel.
The releases said that “The tender offer is being made pursuant to a previously announced definitive agreement among Evraz, Titan Acquisition Sub Inc and Claymont Steel dated December 9th 2007. Upon the successful closing of the tender offer, Claymont Steel stockholders will receive USD 23.50 in cash for each share of Claymont Steel common stock tendered in the offer, less any applicable stock transfer taxes and withholding taxes. Following the purchase of shares in the tender offer, Claymont Steel will become a subsidiary of Evraz.”
The tender offer will expire on January 16th 2008, unless extended in accordance with the merger agreement and the applicable rules and regulations of the Securities and Exchange Commission. The offer will be subject to customary conditions, including anti trust clearance and the acquisition by Evraz of a majority of Claymont Steel’s shares on a fully diluted basis.
ABN AMRO Incorporated is acting as exclusive financial advisor to Evraz and will be the dealer manager for the tender offer. Jefferies & Company Inc is acting as lead financial advisor to Claymont Steel in the transaction and both Jefferies & Company, Inc and Western Reserve Partners LLC delivered fairness opinions to Claymont Steel’s board of directors. Cleary Gottlieb Steen & Hamilton LLP is acting as legal counsel to Evraz and Morgan, Lewis & Bockius LLP is acting as legal counsel to Claymont Steel.
Aricom pays USD144 million for Garinsk iron ore deposit
FIS reported that UK based's Aricom has become the owner of the Garinsk iron ore deposit by paying USD144 million for a 29.3% shareholding in the company holding the license. Thus, the license sold by the government a year ago for USD19 million has been resold to the British Company for USD144 million.
Garinsk deposit's iron ore reserves are estimated at 389 million tonnes. Aricom believes that in three years Garinsk GOK will be able to produce up to 12 million tonnes of high quality concentrate per annum and sell it to the neighboring China.
Aricom Plc, which was separated from Britain's Peter Hambro Mining in 2005, is developing four deposits in the Russian Far East. Its major shareholders are Mr Peter Hambro and Mr Pavel Maslovskiy.
MMK introduces new standard for HR
Interfax reported that the Magnitogorsk Iron & Steel Works has introduced a new foreign standard for hot rolled products.
The EN 10149-2:1995 standard applies to hot rolled products with thickness of 2mm to 16mm and high plasticity.
MMK said that compliance with foreign standards increases the company's competitive edge and influence on the market.
Mechel appoints Mr Khafizov as GD of Yakutugol
Mechel announced that board of directors of its coal mining subsidiary, Yakutugol OJSHC has appointed Mr Igor Khafizov as its General Director succeeding Mr Mukhamed Tsykanov, who served as its acting GD after Mechel’s acquisition of the coal mining company at auction earlier this year.
The release added that Mr Mukhamed Tsykanov has been appointed chairman of the Board of Directors of Yakutugol OJSHC and joins the management of Mechel OAO.
Mr. Khafizov has held positions in Mechel’s Southern Kuzbass OAO coal mining subsidiary as MD from February 2006 to December 2007, Mechel’s Korshunov Mining Plant OAO iron ore mining subsidiary as MD from January 2006 to February 2006 and Mechel’s Korshunov Mining Plant OAO iron ore mining subsidiary as its GD from 2003 to 2006. From 1992 to 2003 he held various positions at Mechel’s Korshunov Mining Plant.
Real GDP growth reported at 7.2% for first 11 months of 2007
The Ukrainian State Statistics Committee said in a statement that Ukraine saw real GDP growth of 7.2%YoY in January to November 2007 compared to the same period of 2006.
GDP grew 6.9%YoY in November 2007 compared to November 2006.
Nominal GDP rose to a tentative UAH 630.019 billion in January to November 2007, including UAH 68.907 billion in November alone. The GDP deflator index totaled 121.3% in January to November 2007.
Rostov authorities resume talks on tin plant construction
FIS reported that the agency for investment development of the Rostov region have resumed the talks with one of the world's leading aluminum tins producers after the coming of Coca cola to the region.
As per report, the tin producer got more interested in the region's offer to place the tin plant there than it was a year ago when the region made its proposal for the first time.
AvtoVAZ plans to produce 1.3 million cars by 2012
RIA Novosti reported that AvtoVAZ plans to increase production from the present 771,600 cars a year to almost 1.3 million vehicles annually by 2012.
AvtoVAZ said "The plant's development program envisages increasing the output of Lada cars to 1.275 million vehicles by 2012."
In 2006 AvtoVAZ earned RUB 2.512 billion of net profit up by 79.4% against 2005 with RUB 152.4 billion worth of revenues. The company expects to receive RUB 166 billion in revenues this year.
Gazprom and Wingas to boost underground gas storage capacity
RIA Novosti reported that Gazprom and Germany's Wingas AG intend to boost their joint underground gas storage capacity to 8 billion cubic meters by 2012.
Mr Alexei Miller CEO of Gazprom said that the company is implementing two underground storage facility projects and could launch two more similar projects in Britain and Germany in the near future.
Mr Alexander Medvedev deputy chairman of the Gazprom said that this would consist of capacity at the RAG and Haidach underground storage facilities. He added that “Gazprom is also drafting a feasibility study for a project in Germany and in discussions with the regulatory authorities about a project in Britain.”
Mr Medvedev said that his figures represented only Gazprom's own storage capacity and if leased capacity is taken into consideration, this figure will be reached by 2010.
Wingas is a joint venture of Wintershall, Germany's largest crude oil and natural gas producer and Gazprom. Wingas has been engaged in gas distribution since 1993 and supplies natural gas to public utilities, regional gas suppliers, industrial and power plants in Germany and other European counties via network pipelines extending over 2,000 kilometers.
Ukr-Can Power calls for coal tender
Ukrainian Journal Staff reported that Kiev based Ukr-Can Power has announced an open tender to select the supplier of 250,000 tonnes of energy coal for the Darnytsia combined heat and power plant.
Ukr-Can Power said that the opening of envelops with bids is scheduled for early January.
Ukr-Can Power was founded in 1997 to reconstruct the Darnytsia combined heat and power plant in Kiev.
Negotiations start with top bidder for RTB Bor
It is reported that the Serbian Privatization Agency has started negotiations with the first ranked bidder for mining and metallurgical complex RTB Bor, Austrian consortium comprising A -Tec Minerals and Metals Holding GmbH, A-Tec Industries AG and Montanwerke Brixlegg AG.
RTB Bor Group is composed of the following sub sections
1. Copper Mine Bor in restructuring from Bor
2. Copper Mine Majdanpek in restructuring from Majdanpek
3. Cooper Smeltery and Refinery in restructuring from Bor
The negotiations were attended by agency representatives, representatives of the Ministry of Energy and Mining and Ministry of Environmental Protection. The talks on investment program and additional social program will resume next week. Also, the talks will be held with local government representatives
